Opt in or opt out? States exercise power over Medicaid's future

FILE - In this Thursday, June 28, 2012 file photo, Rep. Tim Murphy, R-Pa., center, holds up a copy of the Supreme Court's health care ruling during a news conference by the GOP Doctors Caucus on Capitol Hill in Washington. Medicaid advocates are on pins and needles in the wake of the Supreme Court's decision to grant states the choice to opt-out of the Affordable Care Act's expanded coverage mandate.

Medicaid advocates are on pins and needles in the wake of the Supreme Court's decision to grant states the choice to opt out of the Affordable Care Act's expanded coverage mandate.

Under the Affordable Care Act, for the first time in most states, adults earning up to 133 percent of the federal poverty rate, or $31,809 for a family of four, would be eligible for Medicaid. With all states on board, the federal-state health insurance program would pick up an additional 17 million Americans.

But if states opt out, the Center for American Progress argues, they will create a "coverage gap" for millions of low-income Americans. Workers below the poverty line won’t be able to access insurance through Medicaid expansion, but also won’t qualify for government subsidies designed to help wealthier Americans pay for health care. For example, a 55-year-old man who makes $25,000 (217 percent of the federal poverty line) would receive $6,768 in subsidies to help offset the cost of his $8,495 insurance premium. In the meantime, a 55-year-old woman who makes $8,840 per year (77 percent of the federal poverty line) would be required to pay the same premium out of pocket. That’s 96 percent of her income.

“Medicaid advocates, unsurprisingly, would like see the program expand to cover 17 million additional Americans, as it is expected to do by 2019,” she wrote. “The concern stems the demands that governors are already starting to make in return for their participation, which have the potential to cut into the coverage that Medicaid currently provides.”

At least five Republican governors have said they would consider expanding Medicaid if the federal government gave them the money in block grants — a goal they’ve been fighting for since the 1990s. Block grants, a lump sum budget with fewer requirements from the federal government, often mean less money.

“They ought to be giving all states more flexibility, block grant the money and let us find our own unique ways with our own unique populations and demographics to find the best way to provide health care,” Utah Governor Gary Herbert said Friday at the National Governors Association meeting in Williamsburg, Va.. “The key word is flexibility.”

States that refuse to comply will lose supplementary funding, according to Forbes. Before the Affordable Care Act, the federal government covered about 57 percent of Medicaid costs, while states picked up the rest of the bill. For the first three years under the new law, the federal government will pay 100 percent of costs.

But when that time is up, states could end up paying more.

Florida Gov. Rick Scott, a Republican, put it this way: "The burden increasingly shifts to Florida taxpayers in future years. Medicaid, which has been growing for years three-and-a-half times as fast as Florida's general revenue, will soon grow even faster under Obamacare, and education funding will be adversely impaired if we do not control the growth in Medicaid spending."

So far, 14 states have embraced Medicaid expansion, seven have declared intentions to reject it and everyone else is still straddling the fence.